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HOW TO READ AND ANALYZE THE NET ASSET VALUE (NAV) OF A MUTUAL FUND?

DREAMSTIME - MUTUAL FUNDS CHOICES ILLUSTRATION
  1. What is Net Asset Value (NAV)?

  Is the market value of a mutual fund’s unit. It is the price at which investors buy or sell funds to the fund house.

  1. How is Net Asset Value calculated?

  It is calculated by dividing the total net values of all the assets in the investment portfolio by eliminating the all it liabilities.

  1. When is NAV calculated?

   It is calculated at the end of every market day by taking the market prices of securities that the fund holds in to account.

  1. How is NAV different from a share price?

  The share price is a combination of share price quoted in stock exchange (in case of equity funds), analysts view of company s future performance and the demand supply scenario. Therefore the stock price is different from its book value. Since there is no concept of market value in case of mutual fund, the NAV is the book value of the fund.

  1. How important is NAV at the time investments for investors?

  When the investor invests same amount of investment is different schemes, the NAV are not very important. The important factor to keep track of are the returns given by the mutual fund scheme.

  1. What is the indication of regular rise and dip in the NAV?

  It represents the rise and dip in the assets that are in the mutual funds scheme. But in the end, these rise and dips will not indicate the value of the mutual fund. Instead the investors should look at the returns of the fund over time to assess its performance.